Questions:· What kind of decision making was used?
Refer the case study below and answer these questions
· Why was this the best choice of action?
· How much did politics come into play?
· What was the real resistance to change?
· What drove this resistance?
· Most change strategies fail. Why didn't this one? What made this strategy different?
Global Banking Company
The Company is one of the largest banks in Japan, managing $500 billion in assets across more than 700 locations locally. In 2005, they started a global initiative where they restructured their lines of business into four business units:
· Global Corporate Banking
· Investment Banking
· Corporate Center
Each business unit would report to the head office in Japan. After completing the restructuring and reorganization and from the changes in the regulatory environment, the Company realized that executive leadership understanding the strategy wasn't enough. Their leaders needed to disseminate and reinforce the strategic message all throughout the organization.
Historically Japanese companies are renowned for succeeding with clearly articulated strategies. However, this has been losing its effectiveness in the Company. The causes are from the new way the global economy works. Workflow diversity and the sheer speed of business change make it difficult to communicate a cohesive and articulate strategy. This difficulty is compounded by the many cultural differences and strategic goals of their branch offices worldwide. Decisions were not routinely disclosed to those outside of leadership until very recently. Leadership was determined by seniority, not performance; and culture was developed and reinforced by rotating employees through all functional areas.
In 2006, the Japanese banking industry still feeling the effects of the recession and the impacts of regulatory implementing stronger policy controls, the Company questioned its effectiveness for corporate governance. Even though the Company had stellar growth, the Company was concerned. To address this concern Executive leadership choice the score card as the driver for their corporate governance. A score card is a tool to see how well the business is performing in key areas. The key areas the Company was using it for were:
To establish a good risk-control-framework and pay-for-performance-system, the Company's leadership knew that had to define each unit of the regional and global strategy from a bottom up approach. A task force made up people from each business unit provided input into the regional and global strategies by collecting responses. Each office all over the world had their own score card.
When building the Americas scorecard the Company realized that they had to have four main parts of the scorecard:
Common focused on strategic objectives common to one of the Company's score cards worldwide. Objectives where included reducing cost and increasing efficiency.
Shared focused on strategic objectives where the Company's offices would collaborate and work together. These were objectives around processes such as credit approval and operational excellence.
Unique focused on strategic objectives unique to that office. These included risk management objectives.
This scorecard became the template for all offices. Many used it to track revenue growth, risk management, and productivity. In particular the following objectives were emphasized on the score card:
· Financial income (after credit costs)
· Investment-banking fee income (not traditional interest income)
· Growing accounts using existing relationships (Japanese and non-Japanese customers)
· Drastic cost-reduction efforts
· Customer (Japanese/non-Japanese reliability of lending, service quality, and speed)
· Revenue growth (customizable products, customer segments, alignment to strategy)
· Technology efficiencies (infrastructure for operational competitiveness, faster approvals on credit)
· In the Company's multi-cultural organization, standards are needed to manage the human resources. The Company realized that recognizing people as capital influences the Company's competitiveness. This includes assessing the planning and stability of operations and leadership succession planning. Training is now included to focus on enhancing credit risk capabilities and competence. Japanese values of safety, fairness, and no discrimination by race sex, age, or nationality.
· After one year, strategy has become visible and a part of everyone's job.
· Employees talk about strategy and know what it was
· Employees in oversight functions, such as HR and Credit Examination, have become familiar with quantitative approaches to manage business performance. They now focus on the bottom line.
· Management has better control over activities.
· Shared objectives have unified risk management and review functions with customer-facing functions.
· Internal Bank Auditors recognize the balanced scorecard as enhancing corporate governance.
Risk managers now make presentations on the measures in their scorecards